{"id":546,"date":"2018-12-03T01:18:26","date_gmt":"2018-12-03T08:18:26","guid":{"rendered":"http:\/\/www.ghosh.com\/blog\/?p=546"},"modified":"2024-11-22T09:36:20","modified_gmt":"2024-11-22T16:36:20","slug":"business-value-quadarrow","status":"publish","type":"post","link":"https:\/\/www.ghosh.com\/blog\/business-value-quadarrow\/","title":{"rendered":"The Business Value QuadArrow"},"content":{"rendered":"<div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\" style=\"--awb-bg-size:cover;\"><div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\"><div class=\"fusion-text fusion-text-1\"><p><iframe src=\"https:\/\/play.ht\/embed\/?article_url=https:\/\/play.ht\/drafts\/4JugKmj8VHVyKDGJRhL1m4eTfvp2\/s7uMHZs7X&#038;voice=en-US-ChristopherNeural\" scrolling=\"no\" height=\"90px\" width=\"100%\" frameborder=\"0\" allowfullscreen><\/iframe><\/p>\n<\/div><div class=\"fusion-text fusion-text-2\"><h1>&#8220;What\u2019s the Business Value?&#8221;<\/h1>\n<p><span class=\"fusion-dropcap dropcap dropcap-boxed\">T<\/span>his is one of the most important questions I hear often.\u00a0 Businesses large and small, new and mature, want to best understand how they can maximize the value they deliver to others, such as their customers.\u00a0\u00a0The question really includes not only how much value, but where and to whom within an organization.\u00a0 For example:<\/p>\n<ul>\n<li>Marketing and sales people want to communicate ROI (return on investment) for buying their products over alternatives.<\/li>\n<li>Early stage startup founders seeking product-market-fit want to know who values their new offering the most.<\/li>\n<li>Large enterprises considering a company-wide switch to a new software platform need to understand the value throughout the organization.<\/li>\n<li>Department heads aspire to demonstrate the total value their teams delivers to the company.<\/li>\n<li>Product managers want to fully understand the customer value of their new products in order to optimize pricing and go-to-market strategies.<\/li>\n<\/ul>\n<p>But alas, so often, determining this business value is pursued with little structure or rigor.<\/p>\n<p>Back in my days at mega software companies, I was part of elite competitive sales and marketing teams chartered to convince large target Fortune 50 enterprises to switch completely to a different vendor\u2019s software throughout the company.\u00a0 Of course, such large decisions were not made lightly.\u00a0 I helped create and execute Business Value Analyses (BVAs), pre-sales consulting engagements which turned out to be some of the most effective methods in getting competitive accounts to switch.<\/p>\n<p>Ultimately, businesses attempt to translate virtually everything into dollars and cents in order to make objective decisions.\u00a0 So a good guide is to leverage the financial income statement, which focuses on <strong>revenues<\/strong> and <strong>expenses<\/strong> (the vertical axis of the BV QuadArrow).<\/p>\n<p>We would spend days or weeks with a company understanding how things currently operated to create a BVA baseline.\u00a0 Then we explored ways in which our platform\/suite could deliver tangible business value by affecting revenues or expenses across the enterprise.\u00a0 However, potential value-add was not limited to just affecting current revenue and expenses but could also affect future revenue and expenses \u2013 i.e., <strong>existing<\/strong> and <strong>new<\/strong> (the horizontal axis of the BV QuadArrow) revenue and expenses.<\/p>\n<p>By using this BV QuadArrow in a comprehensive way, it\u2019s easier to compare relative points of value (e.g., reducing a current cost versus growing marketshare).\u00a0 And it becomes obvious that affecting existing revenue or existing expenses has limited impact \u2013 i.e., how can you reduce expenses more than 100% (even if that were possible)?\u00a0 On the other hand, finding new revenues can be theoretically unlimited, which can yield much larger value in absolute numbers.\u00a0 Hence, the \u201cnew\u201d quadrants of the BV QuadArrow make up an arrow to depict virtually unlimited potential added value in those two quadrants.<\/p>\n<p>I have used this BV QuadArrow approach now for years in countless situations. For example, it has helped me show early stage tech startups where they can find greater recognized value when it is critical to find the right spearhead market niche. A better understanding of business value (quantitative, qualitative, and to whom) also helps grow business faster via optimized go-to-market and funnel processes.<\/p>\n<p>Now, let\u2019s take a closer look at each quadrant\u2026<\/p>\n<p><a href=\"http:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value.png\"><img decoding=\"async\" class=\"lazyload size-full wp-image-548 alignnone\" src=\"http:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value.png\" data-orig-src=\"http:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value.png\" alt=\"\" width=\"1164\" height=\"496\" srcset=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%271164%27%20height%3D%27496%27%20viewBox%3D%270%200%201164%20496%27%3E%3Crect%20width%3D%271164%27%20height%3D%27496%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-srcset=\"https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-200x85.png 200w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-300x128.png 300w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-400x170.png 400w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-600x256.png 600w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-768x327.png 768w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-800x341.png 800w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-940x400.png 940w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value-1024x436.png 1024w, https:\/\/www.ghosh.com\/blog\/wp-content\/uploads\/2018\/12\/Ghosh-ROI-and-Business-Value.png 1164w\" data-sizes=\"auto\" data-orig-sizes=\"(max-width: 1164px) 100vw, 1164px\" \/><\/a><\/p>\n<h1>Save<\/h1>\n<p>(Save Existing Expenses)<\/p>\n<p>Value propositions in the Save quadrant reduce existing expenses \u2013 e.g., cut costs, or save time.<\/p>\n<p>There are often exceptions to any framework, but many people first identify value in the Save quadrant, probably because it\u2019s relatively easy to identify and quantify existing costs or where time is currently spent.<\/p>\n<p>Value props in this quadrant are easily recognized and measurable.\u00a0 And the benefits of any remedy are usually appreciated quickly.\u00a0 However, the potential amount of cost reduction is limited.\u00a0 Unless you\u2019re dealing with a large absolute cost, incremental reductions may not be enough to \u201cmove the needle\u201d, at least relative to other priorities within the company.<\/p>\n<p>For example, a startup looking to save hotels on their electricity bills should consider what percent of the hotel\u2019s budget is spent on electricity, then cut that down to the amount they can potentially save.\u00a0 Then compare that to the much larger priority for hotels, occupancy rates.\u00a0 It\u2019ll probably be difficult to get the hotel to prioritize saving relatively small amounts on electricity when they\u2019re constantly scrambling to keep their rooms filled.<\/p>\n<h1>Defend<\/h1>\n<p>(Defend Existing Revenues)<\/p>\n<p>Value props in the Defend quadrant protect existing revenues \u2013 e.g., defend revenues from competition, or reduce attrition.<\/p>\n<p>Unless related pains are already being felt (e.g., sales erosion to competition), this may be the least effective quadrant.\u00a0 It\u2019s often difficult to convey the need to protect something that has not yet been attacked.\u00a0 And, like existing expenses, the potential absolute value is limited (to current revenues).<\/p>\n<p>However, if a company is already losing business to competition, or has user attrition problems, then the decision makers are obvious (e.g., head of sales, or product management, respectively), and they already feel and can quantify the pain.<\/p>\n<h1>Grow<\/h1>\n<p>(Grow New Revenues)<\/p>\n<p>Value props in the Grow quadrant deliver increased revenues \u2013 e.g., upsell existing customers, add new customers, speed time to market (or reduce the risk of delay to market), or enter new markets.<\/p>\n<p>The great news in this quadrant is: Who doesn\u2019t want to grow revenues?\u00a0 If you can (and convince that you can) bring in new revenues, you will likely get attention from senior levels with clear spending authority and urgency.\u00a0 And of course, when it comes to new sales and new markets, the sky\u2019s the limit.<\/p>\n<p>However, for a business that is already growing faster than it can operationally keep up, growing revenues further may not be relatively important.<\/p>\n<h1>De-Risk<\/h1>\n<p>(Reduce New Expenses)<\/p>\n<p>Value props in the De-Risk quadrant reduce, impede, or prevent new expenses \u2013 e.g., avoid product recalls, litigation, new regulatory compliance expense, or insurance premium increases.<\/p>\n<p>These are often the least obvious and, unless already experienced, least felt pain.\u00a0 But the business value is virtually unlimited, limited only to the entire value of the company (e.g., if a calamitous event bankrupts the company). \u00a0This can be like selling insurance.\u00a0 Once \u201cburned,\u201d prospects are eager to buy insurance.\u00a0 Before that, insurance is a tough sell.<\/p>\n<p>However, risk or legal managers may appreciate the value from their experience, perhaps at previous companies.\u00a0 And even when probabilities are low, Expected Value calculations can be convincing when you include the huge potential cost (e.g., of litigation or a product recall).<\/p>\n<div class=\"fusion-sep-clear\"><\/div><div class=\"fusion-separator fusion-full-width-sep\" style=\"margin-left: auto;margin-right: auto;margin-bottom:40px;width:100%;\"><\/div><div class=\"fusion-sep-clear\"><\/div>\n<p>The BV QuadArrow doesn\u2019t provide a comprehensive checklist of all possible business value areas, but it can provide a framework for exploring areas of value you bring to an entity.\u00a0 It can be particularly effective if using collaboratively with the prospect, e.g., if built into the discovery step of a sales process.<\/p>\n<\/div><div class=\"fusion-clearfix\"><\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":2,"featured_media":547,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,29,24],"tags":[],"class_list":["post-546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-salesandmarketing","category-startups","category-strategy"],"_links":{"self":[{"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/posts\/546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/comments?post=546"}],"version-history":[{"count":5,"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/posts\/546\/revisions"}],"predecessor-version":[{"id":1497,"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/posts\/546\/revisions\/1497"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/media\/547"}],"wp:attachment":[{"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/media?parent=546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/categories?post=546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghosh.com\/blog\/wp-json\/wp\/v2\/tags?post=546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}